There are many types of mortgage loans available on the market today. Along with many choices comes confusion about which types of mortgage loans are best suited for your particular financial situation. This article will describe some of features of the most common mortgage loans to give you a better idea of what to look for during your research.

Fixed Mortgage Loan

Traditionally, the 30-year fixed mortgage loans were the most popular of the types of mortgage loans on the market. A fixed loan simply means the interest rate does not change over the life of the loan so the monthly payment is the same each month. This predictable monthly cost allows you to budget accordingly since there are no “surprise” increases in the monthly mortgage payment.

Today there are fixed rate types of mortgage loans that have shorter terms like 15, 10 and even 5 years. You must have a hefty income to be able to afford these shorter-term types of mortgage loans but they exist for those who can and want to pay off their mortgage in a short time period.

Adjustable Rate Mortgage Loan

An adjustable rate mortgage loan or ARM is one of the types of mortgage loans that rises and falls with the current interest rate as determined by a variety of indices. When interest rates are low your mortgage payment is low and when the interest rates are high your mortgage payment gets larger. This is the inherent risk with these types of mortgage loans. Many people never expect interest rates to climb when they are low and often get caught unable to meet the higher monthly payments when interest rates do rise.

Convertible Mortgage Loan

Convertible loans are the types of mortgage loans that are a fusion of the fixed rate and the adjustable rate mortgages. This type of loan is popular because it allows for more flexibility with mortgage loan options. When interest rates are high, you can convert to a fixed rate mortgage loan and when interest rates are low, you can convert to ARM based mortgage loans. Convertible loans have other names like, Reduction Option Loan, Reducing Interest Loan, Reducing Interest Mortgage, etc.

FHA Loan and VA loan

The FHA and VA types of mortgage loans are available for special segments of the population. The Federal Housing Authority or FHA insures loans by lenders who lend to low or moderate income level people to help them purchase a home that they would not otherwise be able to afford.

VA loans are mortgage loans that are insured by the Veterans Administration to eligible veterans of the US Armed Forces. The eligibility usually includes a good credit history, ability to meet the monthly mortgage payments, an honorable discharge from the services, etc.

With a better understanding of the types of mortgage loans available on the market comes the responsibility to find out which mortgage is right for your unique situation. A professional mortgage consultant is the best person to turn to before you sign any documents that will lock you into a mortgage. Expert advice can help you ease the learning curve in the confusing world of mortgage loans.